- Gennadiy Goldberg, a U.S. strategist at TD Securities
The number of Americans, who applied for unemployment benefits surprisingly dropped last week to the lowest level in seven weeks, adding to evidence of US economic resilience and improving labour market. Initial claims for state jobless benefits declined 9,000 to a seasonally adjusted 280,000 for the week ended December 20, the Labor Department said, recording the fourth consecutive week of drops in claims. The four-week moving average of claims, considered a better gauge of labour market trends as it strips out weekly volatility, slid 8,500 to 290,250 last week. Meanwhile, continuing claims soared 25,000 to 2.4 million in the week ended December 13. The four-week average of continuing claims surged 20,000 to 2.42 million.
The labour market is heading for the biggest advance in payrolls in 15 years, which has helped to push the unemployment rate to the lowest level in six years of 5.8%, down from a cyclical peak of 10%. A strengthening labour market should result in a faster economic growth, as broadening job gains are starting to underpin faster wage growth, which coupled with lower gasoline prices should boost consumer spending and help the economy withstand slowing global demand. The recent monthly gauge of consumer spending picked up in November, showing the fastest growth in three months.
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